Gambling at a Crossroads as Lottery Marks 20th Anniversary

October 12, 2009

For release noon Oct. 13 and thereafter (675 words)

It was 20 years ago this week that easy money prevailed over traditional Hoosier mores. On Oct. 13, 1989 – one year after voters repealed the state’s constitutional ban on lotteries – the first scratch-off ticket was sold. Since that time, we have embraced the gambling culture. Indiana today has it all: pari-mutuel racing, casinos, racinos, off-track betting, pull-tabs, charity bingo.

Of the 48 states with gaming, Indiana ranks sixth in reliance on its revenues, according to a September report by the Rockefeller Institute on Government. When it comes to casino-related income, we rank second behind only Nevada.

Yet there are signs the gravy train is ending. Our lottery profits from ticket sales dropped 17.5 percent in fiscal 2009, more than any other state’s. Casino revenues rose but only because of 2,000 new slot machines at two horse tracks; profits mostly fell at the 11 riverboat casinos and a few are in danger of defaulting on debt.

At a recent legislative hearing, casino owner Don Barden made a plea for state assistance. Gambling is here to stay, he said. The industry is a major employer and source of state revenue. So shouldn’t Indiana do all it can to maximize its assets?

Answering that question is the main order of business for the Gaming Study Committee, which will meet again Oct. 19 before preparing a report to the 2010 Legislature. Ideas on the table include lower taxes, tab abatements, changes in license fees and other proposals to protect Indiana’s industry from competitors in nearby states.

There is perhaps no trickier issue. On the one hand, it is tempting to say enough is enough, let gambling businesses sink, swim or shut their doors.

On the other hand, Indiana needs the money. Riverboat, pari-mutuel and other gaming taxes totaled $628 million in fiscal 2008. The lottery contributed $217 million in profits to the state treasury. Altogether they represent the state’s fourth biggest revenue source.

Indiana is not alone in facing this dilemma. In most of the 48 states that depend on gambling income, the take is down. Revenue from commercial casinos to state and local governments fell 2.2 percent in 2008, according to the American Gaming Association. In a sampling of 20 state lotteries, 14 saw revenue drops, the Rockefeller Institute reported.

Because budgets are so tight, lawmakers in more than a dozen states have considered expanding gambling as an alternative to raising property or income taxes, according to the National Conference of State Legislatures.

Illinois recently passed a law to authorize video gaming terminals. Hawaii, one of two states with no state authorized gambling, is considering it. Colorado increased the limit on maximum bets, allowed casinos to stay open to 24 hours a day and legalized new forms of gaming.

Helping the gambling industry will no doubt be an appealing option for the 2010 legislature. Yet there are still constituencies – churches, addiction treatment providers, law enforcement and traditional value organizations – opposed to gambling for social reasons.

On this issue, lawmakers should let the majority rule. There is no way for voters to put an issue on the ballot in Indiana, but a scientific survey would suffice. Voters could be asked three questions: Should legislative policy be used to maximize the profits generated by the gambling industry and distributed to taxpayers? Should no changes be made in state gambling laws? Should Indiana wean itself off its dependence on gambling income in favor of other tax sources?

After all, Hoosier citizens were the ones who voted in 1988 to repeal the 1851 constitutional ban on lotteries. The prohibition had been prompted not only by morality of the era but by the collapse of a plan to build a canal in 1818 using state-sponsored lottery money.

Hoosier citizens are the customers of these gambling enterprises. And though Indiana citizens made it possible for the legislature to authorize the lotto, they may not have realized the floodgates would open to all other gambling forms. It’s time to find out if Hoosiers are satisfied with the direction lawmakers have taken us.

Andrea Neal is a teacher at St. Richard’s School in Indianapolis and adjunct scholar with the Indiana Policy Review Foundation. Contact her at aneal@inpolicy.org.

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